Test Bank Chapter 4 Process Costing PDF

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Test Bank Chapter 4 Process Costing...

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Chapter 4 Systems Design: Process Costing

True/False 1. T Easy

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in Processing Department Z are transferred from Processing Department Z to Processing Department Y: Work in Process, Department Y ......... XXX Work in Process, Department Z .....

2. F Easy

XXX

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in the final processing department are transferred to the finished goods warehouse: Finished Goods ........................ XXX Materials .........................

XXX

3. T Hard

Appendix) The "Quantity schedule" and the "Costs to be accounted for" sections of the production report are the same for the weightedaverage method and the FIFO method of process costing.

4. F Easy

In process costing, the same equivalent units figure is used for both materials and conversion costs.

5. F Hard

(Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no ending work in process inventory.

6. T Medium

(Appendix) The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no beginning work in process inventory.

7. F Medium

When assigning costs to partially completed units in the ending work in process inventory, it is not necessary to consider the percentage completion of the units under the weighted-average method.

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8. T Medium

When computing the cost per equivalent unit, it is not necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.

9. T Easy

(Appendix) Under the FIFO process costing method, the equivalent units of production in the production report relate only to work done during the current period.

10. F Medium

(Appendix) The cost per equivalent unit under the FIFO method of process costing is equal to the cost of beginning work in process inventory plus the costs added during the period, all divided by the equivalent units of production for the period.

11. F Medium

The weighted-average method of process costing can only be used if materials are added at the beginning of the production process.

12. T Medium

A manufacturer of blank CDs would ordinarily use process costing rather than job-order costing.

13. T Easy

In order to use process costing, the output of a processing department must be homogeneous.

14. T Easy

In process costing, costs are accumulated in processing departments, rather than by job.

15. F Easy

If all units go through all processing departments then the processing departments are arranged in a parallel, rather than sequential, fashion.

Multiple Choice 16. C Hard

(Appendix) All of the following are correct in referring to a production report except: a. The quantity schedule deals with whole units. b. The total "Costs to be accounted for" must equal the total cost of the units completed and transferred out plus the cost of the ending work in process inventory. c. The equivalent units in the ending work in process inventory will be different if the weighted-average method is used than it is if the FIFO method is used. d. The total of the "Units to be accounted for" will equal the total of the "Units accounted for".

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17. D Hard CPA adapted

Assuming that there was no beginning work in process inventory, and the ending work in process inventory is 50% complete with respect to conversion costs, the number of equivalent units of production with respect to conversion costs under the weighted-average method would be: a. the same as the units completed. b. the same as the units started during the period. c. less than the units completed. d. less than the units started during the period.

18. B Hard

(Appendix) All production costs have been steadily rising in the Donner Company for several periods. The company maintains large work in process inventories. Donner Company's cost per equivalent unit computed using the FIFO method would be: a. the same as that computed under the weighted-average method. b. higher than that computed under the weighted-average method. c. lower than that computed under the weighted-average method. d. could be the lower than, the same as, or higher than that computed under the weighted-average method.

19. C Medium

(Appendix) If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system, then it is reasonable to assume that: a. there was no beginning work in process inventory. b. processing centers are arranged in a sequential pattern. c. the FIFO cost method is being used. d. the weighted-average cost method is being used.

20. A Easy

Process costing would be appropriate for each of the following except: a. custom furniture. b. oil refining. c. grain milling. d. newsprint production.

21. B Hard

An operation costing system is: a. identical to a process costing system except that actual manufacturing overhead costs are traced to units of product. b. the same as a process costing system except that direct materials costs are accounted for in the same way as in job order costing. c. the same as a job order system except that direct materials costs are accounted for in the same way as in process costing. d. identical to a job order costing system except that actual manufacturing overhead costs are traced to units of product.

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22. D Medium CMA adapted

Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows: Units Work in process on October 1 ............ 6,000 Units started during October ............ 50,000 Units completed and transferred to the next Department during October ... 44,000

Materials Cost P 3,000 P25,560

What was the materials cost of work in process at October 31? a. P3,060 b. P5,520 c. P6,000 d. P6,120 23. A Medium

David Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units that were 80% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P123,200. An additional 65,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of P389,250 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a. P7.547 b. P7.700 c. P4.634 d. P5.988

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24. A Medium

Larner Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below:

Beginning work in process inventory ... Started into production during June ... Ending work in process inventory ......

Units 24,000 86,000 19,000

Percentage complete 40% 20%

According to the company's records, the conversion cost in beginning work in process inventory was P68,064 at the beginning of June. Additional conversion costs of P585,324 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a. P6.892 b. P6.806 c. P5.575 d. P7.090 25. C Hard CPA adapted

Glo Co., a manufacturer of combs, uses the weighted-average method in its process costing system. The company sold 125,000 units during the month of April. There is only one processing department. The following additional information is provided: Inventory at April 1: Work in process ................ None Finished goods ................. 37,500 units Inventory at April 30: Work in process (75% complete as to conversion costs)....... 8,000 units Finished goods ................. 30,000 units What were the equivalent units of production for conversion costs for April? a. 126,500 b. 125,500 c. 123,500 d. 117,500

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26. D Hard

The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units of production with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department: a. consisted of 5,000 units. b. consisted of 2,500 units. c. was 65% complete with respect to conversion costs. d. was 40% complete with respect to conversion costs.

27. B Medium

The following data were taken from the accounting records of the Hazel Corporation which uses the weighted-average method in its process costing system: Beginning work in process inventory (100% complete as to materials; 70% complete as to conversion) ............. 30,000 units Started in process during the period .......... 90,000 units Ending work in process inventory (100% complete as to materials; 60% complete as to conversion) ............. 20,000 units The equivalent units of production for conversion costs was: a. 102,000 units. b. 112,000 units. c. 111,000 units. d. 100,000 units.

28. B Medium

Baker Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 8,000 units in its beginning work in process inventory that were 90% complete with respect to conversion costs. An additional 95,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 11,000 units in the ending work in process inventory of the Assembly Department that were 90% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Assembly Department for the month? a. 94,700 b. 101,900 c. 98,000 d. 92,000

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29. C Medium

Jawson Company uses the weighted-average method in its process costing system. Operating data for the Painting Department for the month of April appear below:

Beginning work in process inventory ... Transferred in from the prior department during April ............ Ending work in process inventory ......

Units 6,300 65,600 4,600

Percentage complete 10% 70%

What were the equivalent units of production for conversion costs in the Painting Department for April? a. 67,300 b. 68,820 c. 70,520 d. 63,900 30. C Medium

Sarver Company uses the weighted-average method in its process costing system. The Fitting Department is the second department in its production process. The data below summarize the department's operations in March.

Beginning work in process inventory ... Transferred in from the prior department during March ............ Ending work in process inventory ......

Units 7,100 61,000 4,600

Percentage complete 70% 30%

The Fitting Department's production report indicates that the cost per equivalent unit for conversion cost for March was P8.24. How much conversion cost was assigned to the units transferred out of the Fitting Department during March? a. P482,287.20 b. P502,640.00 c. P523,240.00 d. P561,144.00

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31. B Medium

The Nichols Company uses the weighted-average method in its process costing system. The company recorded 29,500 equivalent units of production for conversion costs for November in a particular department. There were 6,000 units in the ending work in process inventory on November 30, 75% complete with respect to conversion costs. The November 1 work in process inventory consisted of 8,000 units, 50% complete with respect to conversion costs. A total of 25,000 units were completed and transferred out of the department during the month. The number of units started during November in the department was: a. 24,500 units. b. 23,000 units. c. 27,000 units. d. 21,000 units.

32. B Easy

The Assembly Department started the month with 35,000 units in its beginning work in process inventory. An additional units 472,000 were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? a. 507,000 b. 473,000 c. 471,000 d. 541,000

33. A Medium CPA adapted

Huffer Company uses the weighted-average method in its process costing system. The following information pertains to Processing Department D for the month of May:

Beginning work in process .... Started in May ............... Units completed .............. Ending work in process .......

Number of units 30,000 80,000 85,000 25,000

Cost of materials P11,000 P36,000

All materials are added at the beginning of the process. The cost per equivalent unit for materials is closest to: a. P0.43. b. P0.45. c. P0.55. d. P0.59.

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34. D Medium

Harker Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 16,000 units in its beginning work in process inventory that were 40% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was P29,440. An additional 59,000 units were started into production during the month and 61,000 units were completed in the Welding Department and transferred to the next processing department. There were 14,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of P246,400 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a. P4.176 b. P4.600 c. P3.375 d. P4.421

35. A Medium

Paxton Company uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.

Beginning work in process inventory ... Transferred in from the prior department during January .......... Completed and transferred to the next department during January .......... Ending work in process inventory ......

Units 2,700

Percentage complete 80%

57,000 50,300 9,400

20%

The accounting records indicate that the conversion cost that had been assigned to beginning work in process inventory was P10,973 and a total of P268,107 in conversion costs were incurred in the department during January. What was the cost per equivalent unit for conversion costs for January in the Molding Department? (Round off to three decimal places.) a. P5.348 b. P4.038 c. P5.080 d. P4.704

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36. D Easy

The Richmond Company uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was P2.75 for materials and P4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was: a. P126,000. b. P 75,600. c. P 80,100. d. P 95,400.

37. D Hard CPA adapted

(Appendix) On November 1, Yankee Company had 20,000 units of work in process in Department No. 1 that were 100% complete with respect to material costs and 20% complete with respect to conversion costs. During November, 160,000 units were started in Department No. 1 and 170,000 units were completed and transferred to Department No. 2. The work in process on November 30, was 100% complete with respect to material costs and 40% complete with respect to conversion costs. By what amount would the equivalent units of production for conversion costs for the month of November differ if the FIFO method were used instead of the weighted-average method? a. 20,000 decrease. b. 16,000 decrease. c. 8,000 decrease. d. 4,000 decrease.

38. D Easy

Fabian Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Assembly Department for the month? a. 93,000 b. 83,100 c. 87,000 d. 89,400

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39. C Easy

Narver Company uses the weighted-average method in its process costing system. Operating data for the Lubricating Department for the month of October appear below:

Beginning work in process inventory ... Transferred in from the prior department during October .......... Completed and transferred to the next department during October .......... Ending work in process inventory ......

Units 6,600

Percentage complete 60%

40,100 37,100 9,600

80%

What were the equivalent units of production for conversion costs in the Lubricating Department for October? a. 43,100 b. 37,100 c. 44,780 d. 47,780 40. B Hard

Black Company uses the weighted-average method in its process costing system. The company's ending work in process inventory consists of 5,000 units, 80% complete with respect to materials and 50% complete with respect to labor and overhead. If the total Peso value of the inventory is P60,000 and the cost per equivalent unit for labor and overhead is P8.00, the cost per equivalent unit for materials must be: a. P5.00. b. P10.00. c. P8.00. d. P4.00.

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41. B Hard

Department 2 is the second of three sequen...